Low ewe premium fears bring emergency aid call
Low ewe premium fears bring emergency aid call
By Philip Clarke
FARMING unions are to press for emergency aid for the sheep sector from the government and Brussels, following forecasts of an exceptionally low ewe premium.
With sheep prices motoring elsewhere in Europe, market managers in Brussels have estimated a total payment for the year of £8.07 a ewe. That means the first 30% advance, to go out in July, will net UK producers just £2.42 a ewe.
Last year the total premium came to £10.73 a ewe. That itself was £3 down on the previous season and £7 less than the year before that.
"The current situation is just atrocious," NFU livestock chairman, Les Armstrong, told FW. "This premium just does not reflect the position we are in with foot-and-mouth. UK producers are not in the same market as everyone else in Europe."
This view was echoed by other farming unions, which point out that the premium is being distorted by high lamb prices on the Continent due to BSE and the ban on British sheep. The strong £ has compounded the problem.
"The EU commission must be in cloud cuckoo land if it thinks £8.07 is going to be anything like sufficient to sustain a sheep industry in this country this year," said Scottish NFU president, Jim Walker. "The EU sheep regulation allows exceptional measures to be taken to support a market affected by movement restrictions. It is essential we get immediate access to this exceptional support."
Indicative of the way the UK has been left behind, hogget prices, which were at 265p/kg in mid-February, have slipped to 180p/kg. Over the same period, fat lambs in France have climbed from 34.5 francs/kg (335p/kg) to 44 francs/kg (427p/kg). The forecast premium is based on an EU average price of 237p/kg. NFU sheep adviser, Kevin Pearce, estimates that using the UK price in isolation would give a premium of over £17 a ewe. "There is a justification for the UK to be treated separately this year," he said. "Alternatively, the UK government could pay a one-off top-up, as the Irish have done in the past."
But the commission believes the first estimate of ewe premium is a fair one. "There is so much uncertainty in the market at the moment it is almost impossible to predict what average EU prices will be this year," said a senior official.
"The UK in particular is an unknown quantity. Prices could go either way. On paper it looks like there will be a lamb surplus this summer. But a lot of animals have been killed and there will be a healthy market for replacements. Imports from Ireland will also be well down, as they focus on the French market."
Against this background, the commission does not want to pay any more ewe premium at this stage, in case markets go higher and it ends up having to reclaim money from producers.
The source confirmed that emergency aid was available from Brussels, though he did not expect the UK to apply for it. That would cut the annual rebate due to the Fontainebleau agreement. "They turned it down with swine fever, preferring instead to pay national aid."
lEwe premium proposals – see page 22. *
2001 forecast ewe premium
k/100kg p/kg
Basic price 504 310
Stabiliser -7% -7%
Stabilised price 469 288
EU market price 385 237
Loss of revenue 84 51
Coefficient 0.1568 0.1568
Forecast premium k13.1 £8.07
30% first advance k3.9 £2.42